Mounting import competition from China has increased unemployment in manufacturing and suppressed wages in local labor markets around the United States[1]. This article investigates the political effects of this China trade shock, using a unique dataset of the district-level economic impact of Chinese imports to the United States. The liberalization of trade following China’s accession to the World Trade Organization increased political polarization among American voters and encouraged legislators in economically hard-hit districts to take positions hostile to China. The result is that Congress is even more hostile towards China today than in the aftermath of the Tiananmen Massacre. After 2003, members of Congress representing districts more adversely impacted by import competition were more likely to vote against China, controlling for ideology and partisanship. By contrast, import competition was not a significant predictor of earlier congressional opposition to granting most-favored nation status to China (suggesting that voting on these crucial pieces of legislation was driven by non-economic concerns such as human rights). Far from being the political win-win its proponents envisioned, trade has eclipsed human rights and Taiwan as the main driver of hostility to China in Congress.

The overall report covers defense, science and technology and energy. In the energy chapter, the main conclusion was that domestic demand drives innovation in the energy sector. S&T efforts in the Chinese energy sector are framed in the context of the pursuit of indigenous innovation, which is the desire to localize production and intellectual property. The Chinese energy industry has been successful in areas such as coal-fired power plants where domestic demand is high. They have been less successful and have devoted fewer resources in areas where they have traditionally been relatively modest consumers, such as gas turbines. As energy demands shift, the Chinese energy sector is likely to seek greater intellectual property in the areas where they lag.